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ISLAMABAD: The Pakistan Muslim League-Nawaz government before completing its term on May 31 decided to adjust the financing of Rs180 billion commercial loans in consumer tariff through a surcharge, a Senate committee was informed on Tuesday.

The power division was asked to make the adjustment after the Rs180bn financing was built in the consumer tariff, said an additional secretary of finance ministry while giving a briefing to the Senate’s special committee on circular debt.

He explained that an exercise carried out on the instruction of then Prime Minister Shahid Khaqan Abbasi put the circular debt payable at Rs514 billion till December 2017.

According to him, a working paper presented to then PM Abbasi reported energy purchase payments at Rs298bn, capacity payments at Rs105bn and interest payments, late payment surcharges, other dues and taxes amounted to another Rs110bn or so.

It was decided that energy payments be settled at the earliest and a summary was presented to the federal cabinet for approval.

The cabinet approved mobilisation of about Rs250bn for which the finance ministry was asked to facilitate market financing of about Rs180bn while some other amounts were non-cash adjustments.

PML-N govt decided to finance commercial bank loans through surcharge, Senate body told

The market financing from the commercial banks was arranged in three instalments of Rs80bn, Rs50bn and Rs50bn in that order and the entire amount of Rs180bn was disbursed to the Central Power Purchasing Agency (CPPA). The CPPA then made onward payments to Wapda for hydropower, nuclear power plants, independent power plants, generation companies and fuel suppliers under an agreed payment cycle.

Senator Shibli Faraz, who heads the special committee, asked the additional secretary if this arrangement did not mean that consumers were being made to pay for all the inefficiencies in the power sector.

He also inquired if the finance ministry had simply arranged funds as desired by the government or also conduct an independent examination.

The additional secretary said the finance ministry reconciled receivables and payables in consultation with all the stakeholders including the power division. He said the government provided Rs118bn subsidy out of budget last year on account of energy prices and allocated Rs150bn for the new financial year.

Mr Shibli expressed displeasure over the fact that there was no impact analysis of policy decisions and nobody appeared interested in re-working a system that had failed to deliver for past several decades.

The meeting was earlier told that a subsidy was meant for lifeline consumers of 100 units per month but it went up to 300 units per month. Yet many affluent consumers with monthly consumption of 1,000 units in summers enjoyed subsidy when their consumption dropped below 300 units in winters.

The committee head said it was strange that while problems and issues of the various distribution companies varied from one province to another, all the distribution companies were being run under same stick.

Quetta Electric Supply Company (Qesco) chief executive officer said that 1000mw was being supplied to Balochistan which required around 1,800mw. However, he added, that the province could not procure more than 1,000mw due to capacity constraints when it had been allocated 1,300mw.

He said about 75per cent of its power consumption was used for agriculture which not only resulted in drop in water table from 300 feet to around 1,100 feet but also contributed to the circular debt. He was of the opinion that domestic consumers were very up to the mark.

He said agriculturists did not pay even the fixed bill of Rs10,000 despite the fact their total ceiling for monthly bills stood at Rs75,000.

Senator Faraz said a subsidy should be provided to small farmers and a system be put in place to avoid its misuse by the agriculturists who installed multiple connections and larger motors to keep their bills in the subsidised category.

Renewable energy

While discussing the plight of the Alternative and Renewable Energy, the Senate committee observed that in order to deal with the energy crisis, it was imperative that alternative energy sources were promoted to control import bill. The board also criticised the PML-N government for bringing the sector to a grinding halt.

Mr Faraz said the government had deliberately discouraged renewable sector to keep space for coal- and LNG-based projects.

CEO of the Alternative Energy Development Board (AEDB) Amjad Awan said around 1,036mw power through alternative energy sources was being supplied to the national grid. Solar power projects were generating 430mw, he said, asserting that the Quaid-i-Azam solar power plant was not a failed project as it was delivering 18pc capacity factor against an approved standard of 17pc by the regulator.

Published in Dawn, July 4th, 2018